Silver ETFs after the rally: Buy more, hold or reduce exposure?

Silver prices have nearly halved from their January peak, leaving investors who bought Silver ETFs during the rally with a dilemma: buy more at lower prices, hold on or cut their losses?

Silver hit a record high of nearly $117 per ounce on January 28, 2026. Fast forward to October 23, and the metal has fallen more than 53 percent to trade just above $54 per ounce. On the MCX, silver fell from a record Rs 3.85 lakh per kg in January to around Rs 1.91 lakh on October 27.

Yet investor interest has remained strong. Silver exchange-traded fund (ETFs) attracted Rs 1,974 crore in September, up 55 percent from August, according to AMFI data.

A silver ETF lets you invest in silver without buying or storing the metal yourself. The fund buys physical silver of 99.9 percent purity, held in vaults by a custodian, and issues units that track the domestic price of silver. These units are listed and traded on stock exchanges like shares, so you need a demat and trading account to buy or sell them.

But does the correction make silver worth buying? Wealth managers have differing views.

Bought at higher prices? Hold or sell?

“Buying silver at a higher price does not automatically mean the investment should be sold, just as a correction does not necessarily justify buying more,” says Prashant Gupta, Co-founder, Wealthy.in.

Investors with smaller allocations and a long investment horizon may consider holding. Those who invested heavily expecting quick returns, however, should reassess their exposure.

Adil Chacko, Executive Director at Anand Rathi Wealth, takes a more cautious view.

He advises against averaging down. “It increases exposure to an already volatile asset. For instance, if a Rs 1 lakh investment falls to Rs 70,000, it needs to recover nearly 43 percent just to break even,” he adds.

Chacko further suggests, “Investors with significant silver exposure should consider gradually shifting towards diversified equity mutual funds, even if that means booking losses.”

How much silver is too much?

According to Gupta, “precious metals should form a modest part of a portfolio, with silver generally accounting for a smaller share than gold because of its higher volatility.”

He gives an example: in a Rs 10 lakh portfolio, if Rs 2.5 lakh is invested in silver, a further 10 percent fall in silver alone would reduce the overall portfolio value by Rs 25,000, assuming other investments remain unchanged.

Chacko, however, does not recommend allocating to silver for long-term wealth creation. According to his analysis of historical data since 1990, silver delivered a Sharpe ratio, a measure of risk-adjusted returns, of 0.27 compared with 0.59 for the Nifty 50 over five-year rolling periods.

He argues that even investors with 5–10 percent exposure to silver should consider gradually rebalancing towards diversified equity funds.

Is this the time to buy more?

For investors who still want silver exposure, Gupta suggests staggered investments rather than committing a large lump sum immediately.

This allows purchases at different price levels, although it does not protect against further declines.

Chacko disagrees. He points out that silver has historically experienced annual volatility of around 30–32 percent, compared with 17–18 percent for the Nifty 50.

“A sharp correction does not necessarily make silver an attractive investment opportunity,” he says, advising investors against buying simply because prices have fallen.

For those considering Silver ETFs, there is another factor to check: the ETF’s market price against its indicative net asset value (iNAV).

Gupta explains that buying an ETF at Rs 103 when its iNAV is Rs 100 means paying a 3 percent premium. If that premium disappears, investors could lose money even without a decline in silver’s underlying value.

Investors needing their money within the next one or two years should also be cautious, as silver’s sharp price swings make it unsuitable for near-term financial commitments.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.